We often hear senior management wishing their sales force would deliver “boring” results. They dream of a sales team that’s on auto-pilot, with monotonously consistent on-plan results quarter after quarter. Some companies even offer a “consistent performance” bonus for sales reps who meet all four of their quarterly quotas. But in our view, those companies are committing…

In my last post, I introduced the concept of boneheaded compensation plan ideas. These are plan design mistakes that at best reduce the value of these extremely expensive plans, and at worst motivate behavior that is the opposite of what you want.

Welcome back to our series on the Deadly Sins of Incentive Compensation. As is often the case, many best – and worst – practices are obvious, but we sometimes need a reminder. In this post, let’s look at a Deadly Sin that is less obvious, at least if you go by the number of times it’s committed, and that’s…

In our recurring series on the Deadly Sins of Incentive Compensation, so far we’ve focused on the sins of plan delivery – that is, the errors made when documenting, communicating, and administering comp plans. In this post, we return to the sins of plan design – errors resulting from flaws in the way we structure the plans in the first place. Here’s one of my “favorites”:

Well-designed incentive compensation plans – especially sales commission plans – are a powerful way to motivate great performance. But they’re also easy to screw up, and the results are plans that not only fail to motivate, but are incredibly expensive, in terms of employee productivity. With that in mind, with this post we start a recurring series of blogs on the 121 Silicon Valley website: The Deadly Sins of Incentive Compensation. So let’s start with…

Now is the time when companies with December 31 fiscal years start thinking about next year’s compensation plans. And sometimes, so does your salesforce. So this month I want to warn you about…

Our recurring series on the Deadly Sins of Incentive Compensation will sometimes focus on plan design choices that appear sensible at first glance, but on further consideration are expensive and ineffective. Here’s one of my “favorites”:

Randy Bolten has held the CFO position at public and private companies in Silicon Valley. I recently caught up to him about Startup stock options and its pitfalls.

We return to the rich, fruitful topic of “boneheaded compensation plan ideas.”  A capped compensation plan is one that sets an upper limit on the total amount of compensation, even if the calculation formulas indicate a higher amount.  Capped plans are one of those often well-intentioned and unfortunately common incentive compensation plan characteristics that can have disastrous consequences.

As suspicious as I am about spot bonuses (see “Deadly Sin #4 – Too Much in ‘All-or-Nothing’ Bonuses”), we’re in the year end holiday spirit, so even we CFOs are willing to make exceptions.   Use one-time rewards to recognize behavior that you might not normally see in your sales reps – or your customers/prospects. Here are some examples:

As we near the midpoint of the sales year – at least for December 31 companies – it starts to become apparent who the really big producers are, and just how much they might be earning this year. It’s a good time to re-examine your sales commission plan if you’re one of those companies that’s commits…